Security is particularly important when acquiring and storing bitcoins. What benefits investors if they invest in cryptocurrencies for the long term, only to be robbed of their coins by theft. The correct selection of a wallet is particularly important for security. One possible method is the paper wallet. How do I use a paper wallet for Bitcoin?
In this article, we want to deal with the topic of paper wallet and discuss how you can use a paper wallet for Bitcoin.
Why do we need wallets for cryptocurrencies?
Cryptocurrencies such as Bitcoin can be purchased on various platforms. However, it requires a wallet to “store” cryptocurrencies. The term storage is somewhat misleading. Because a wallet only receives the private keys that give you access to the cryptocurrencies on the respective blockchain.
Wallets come in many different forms. They differ in such factors as simplicity of application, security and price. Furthermore, there are wallets that can be used extremely for many cryptocurrencies and specialized wallets for a specific cryptocurrency.
What types of wallets are there?
We distinguish different types of wallets depending on their form and applicability:
- Online Wallets: An online wallet is usually a wallet on crypto exchanges. These wallets are constantly connected to the Internet. These wallets are managed by a third party. They are considered the most insecure wallets. However, security on crypto exchanges has increased massively in the past.
- Browser Wallets: Browser wallets can be integrated into various Internet browsers. They are mostly easy to use. However, they are also constantly connected to the Internet.
- Mobile Wallets: These are wallets that can be used on mobile devices. They are mostly used for short-term holding and trading of coins. There are alternatives with more security for long-term holding of cryptocurrencies.
- Desktop Wallets: Desktop wallets are wallets that can run on the surface of a computer. They offer more security than online wallets. The applicability is often very different.
- Hardware Wallets: A hardware wallet is a device that resembles a USB stick in shape and stores the data on the blockchain offline. These wallets offer the highest security, but are usually a bit more expensive.
- Paper Wallets
You can find an overview of all types of wallets in our article on the topic.
Now you have the opportunity to invest in cheap Bitcoin and other cryptocurrencies. To do this, just go to the Binance and Bitfinex exchanges!
What is a Paper Wallet?
A paper wallet is basically a “wallet”, which you create yourself with a sheet of paper and a ballpoint pen. You write on the piece of paper your public address on the blockchain and the private key that gives you access to the blockchain.
Often a paper wallet can also be printed out. These paper wallets can also contain a QR code. One factor that makes the paper wallet even more secure is the protection of the private key with another password. Only by entering the password (which should be kept separately) can a person gain access to the cryptocurrencies.
Is it possible to store Bitcoin with a paper wallet?
Yes. A paper wallet is very well suited for securely storing the private key to the Bitcoin blockchain. With Bitcoin, paper wallets were used for the first time. They are the simplest form of storing access data to cryptocurrencies such as Bitcoin.
What is the advantage of a paper wallet for storing Bitcoin?
A paper wallet for Bitcoin or other coins has the advantage that it does not have access to the Internet. Hackers can’t steal your coins. In the past, hacker attacks and thefts of large amounts of cryptocurrencies have repeatedly occurred, especially on crypto exchanges. But even online wallets are not 100% safe from these attacks.
You can store the Paper Wallet offline in a safe place. Due to the lack of access to the Internet, the only risk is that you lose the wallet or that a person offline steals the wallet from you.
A paper wallet for the Bitcoin is also worth it for the reason that it is free. The secure offline wallets like the Ledger Nano X have a certain price. Especially for people who have just started to invest in Bitcoin, it is worth using a free paper wallet.
What are the disadvantages of the paper wallet?
With the Paper Wallet, a great responsibility comes to the user. The paper wallet is just a piece of paper, but it must be kept very well. A loss could mean that you no longer have access to your bitcoins. With a piece of paper, it is very possible that it will be misplaced. Therefore, it is a good idea to have a backup.
You also have to make sure that no other person has access to the paper. For other types of wallets, another entity such as an exchange can take over this responsibility for you. Desktop wallets are also harder to “misplace” than a piece of paper.
The more cryptocurrencies you own, the more you should think about looking for an alternative. Hardware wallets are very suitable for large sums and a variety of coins, as you only need one access to have access to many different private keys.
Who is a Bitcoin Paper Wallet suitable for?
Especially for beginners, a paper wallet is well suited. Although storage on the stock exchanges is probably the most convenient alternative. But you should not ignore the security concerns. With the Paper Wallet you have full control when you own the Bitcoin for the first time.
Especially for people who have only invested in the Bitcoin, the Paper Wallet is suitable. So you don’t have to keep countless private keys and can make your wallet very clear.
Overall, people should use paper wallets that can take very good care of their information and possessions. A paper wallet requires careful storage. Furthermore, it is suitable for people who are very concerned about security and are very skeptical about storing their data online.
If you have a low budget and don’t want to invest a lot of money in a wallet, a paper wallet is recommended as a secure alternative to hardware wallets.
You can also purchase Bitcoin and other coins on the crypto exchanges Coinbase and Kraken.
